GameStop's Bitcoin Holdings Lose Value Amid Stock Decline and Crypto Market Stress
GameStop purchased $512 million worth of Bitcoin in May to support its treasury operations. However, recent Q3 results revealed mixed financial performance with three-month sales amounting to $821 million, down 4.5% year over year, and nine-month sales totaling $2.52 billion, showing a slight decrease. Gross profits increased by 6.2% in the three-month period and 7.8% over nine months.
Despite this, the value of GameStop’s Bitcoin treasury declined by $9.2 million over the past three months. This drop in valuation coincides with a roughly 19% fall in the Bitcoin price, which fell from $115,500 to $92,280 during the same timeframe. The decrease in Bitcoin value contributes significantly to the reduced treasury valuation.
The crypto market has experienced notable stress, including a historic $19 billion single-day crypto liquidation cascade, amplifying bearish sentiment toward Bitcoin. In response to these market conditions, GameStop's stock price fell more than 3% in one day, trading around $22.40, which is about 32% below its pre-Bitcoin-purchase levels in May.
GameStop's earnings report also noted that the company might need to sell some of its Bitcoin holdings as part of its treasury management strategy. This move parallels other firms like Strategy (formerly MicroStrategy), which holds approximately $61 billion in Bitcoin and has seen its stock decline while considering Bitcoin sales to meet financial obligations. Strategy has also created a $1.44 billion cash reserve to pay dividends, indicating active management amid volatile markets.
